The prior signaling was clear. In the general belt-tightening announced in the 2025-26 Budget, due to the deteriorating state of the Hong Kong Special Administrative Region’s public finances, year-on-year cuts of 2 percent to our tertiary education establishments were announced as one key sector targeted. Associated with this, and as a means of justification, was talk of the budgetary surpluses our grand universities currently enjoy which, with the latest figures, is about HK$140 billion ($18 billion). This seems to imply that cuts are affordable and indeed represent fat to be trimmed and in any event are no more than should be done when fiscal conservatism is needed and should be shared around. All the top universities put out news releases after the official budget, acknowledging the need for such measures and indeed offering strong support to our government in their enaction. So far so good, but the key now is how these are managed to prevent structural, reputational and educational decline.
Indeed, these surpluses sound like a lot with my own university, the University of Hong Kong, leading the pack at a cool HK$41.5 billion. For context, however, this is only about four years of operational costs. Yes, a decent cushion for a rainy day, but the current HK$12.2 billion annual spend reported for the 2022-23 fiscal year only covers teaching, learning and research, and a large fraction is also ringfenced via endowments and the like. It does not include expensive new buildings, refurbishments, etc, that, for example, keep HKU, our premier world leading pillar of tertiary education, equipped with the modern facilities and cutting-edge infrastructure that is fit for purpose in an ever-changing world. The story is similar at our other elite universities. We need to appreciate that together, our tertiary education establishments are a major, global success story, with five in the global top 100 in the just-released and highly respected Times Higher Education University rankings (THE). The story is similar with the QS ranking system, where HKU is currently placed 17th globally — our highest ever value. So, HKSAR, as a city jurisdiction, is literally a mini-superpower in tertiary education, with no other global city boasting such prowess with the possible exception of London. We must protect this as a key arm of our amazing soft-power capacity that feeds our global talent pool.
However, our rankings, and so reputation and attractiveness to bring in talent from academics and students alike, are fluid and surprisingly fragile. They depend on continuous investment in excellence. This is because the ranking spread, especially once you get out of the global top 50, is a very tight function. Here, sudden shocks like closing a leading lab, losing key staff (like a Nobel laureate) or increasing fees can lead to a surprisingly large shift in ranking value. This is because universities are tightly packed in assessment scores at lower rankings, and small local changes can have a big effect in the round. Rankings should not matter as much as they do, but that is the reality. Hence, every university attempts to keep its place as best it can, as funding, endowment and more feeds off global standing and associated reputation. Funding strength and financial reserves are an absolute key element in the armory of such reputational protection. That is why playing too fast and loose with funding support is a dangerous game that can negatively affect our golden goose if we are not super careful.
Some people are talking about developing Hong Kong into an international education hub. But this misses the point. We are already there! We just need to nurture and protect it. This is why these cuts to our golden-egg-laying gaggle of geese should proceed with extreme prudence and caution with tight planning lest we fall into the trap of damaging the very vehicle that can generate the wealth needed to allay the budgetary pressures in the future
We need to look at our university funding environment in a nonlocal way and set this against an interesting, current global context that provides a perhaps once-in-a-lifetime opportunity for us.
Indeed, we only need to look to the United States and the United Kingdom for such impacts as these two countries dominate the global ranking systems with all top 10 global universities currently based in these two countries (seven from the US, three from the UK). Tsinghua University and Peking University are ranked at an extremely impressive 12th and 13th respectively in the THE for this year, and HKU, the third-best university in China, at 35. First, let’s look at the UK. Here, the student fee model is becoming unsustainable, having been fixed for a decade. This is leading to many elite universities plunging into the red with even the vice-chancellor of Cambridge University (globally ranked fifth), in an opinion piece in The Guardian on Feb 8, warning of the loss of “unbelievable talent” amid PhD funding cuts. To reinforce this, the latest financial report from the UK’s Office for Students from November 2024 warned that 72 percent of English universities will be in deficit by the end of the academic year if nothing is done. Reputations and standing take decades, even centuries, to establish, but can be badly damaged much more quickly and then will be extremely hard to regain. The situation in the US is different, but no less problematic, as culture wars and hostility to overseas students from India and China in particular are changing campus environments. One serious effect of diversity, equity and inclusion (DEI) policies, cultural and political turmoil (as opposed to funding) and even more overt pressures, is that it has led to a clear brain drain of top talent, with many top ethnic-Chinese scientists being lured to top Chinese universities.
This is just as top Chinese universities continue to invest in talent and facilities, reaping huge rewards in ranking improvements and, of course, research outputs as reflected in papers, patents and performance, which in the end is what really matters. One key example is the DeepSeek AI disruptive technology that emerged from Zhejiang University alumnus Liang Wenfeng. Zhejiang University (Zhe Da), ranked 47th in the THE, which models itself on Stanford University in the US, is based in my favorite Chinese mainland city of Hangzhou. It has grown rapidly and built its prowess and reputation on high, targeted investment in world-beating talent and cutting-edge research facilities. This enabled Liang to thrive and so for DeepSeek to arrive! Zhe Da is now only behind Harvard in published papers deemed to be in the top 10 percent of their fields!
Some people are talking about developing Hong Kong into an international education hub. But this misses the point. We are already there! We just need to nurture and protect it. This is why these cuts to our golden-egg-laying gaggle of geese should proceed with extreme prudence and caution with tight planning lest we fall into the trap of damaging the very vehicle that can generate the wealth needed to allay the budgetary pressures in the future.
The author is the director of the Laboratory for Space Research, Hong Kong University.
The views do not necessarily reflect those of China Daily.
